Investors are saying Apple needs to come out with a better mid-range iPhone to compete with Android devices, which are available for every budget, in order to boost sales and increase profits, according to Reuters.
According to analysts, Apple did not reach the mark expected during the holiday shopping season due to a small response to their iPhone 5C, a cheaper version of the iPhone 5S, Reuters reported.
On Tuesday Apple shares opened down 8 percent and fell to $502.47 during early trading, according to Reuters. Fourteen different brokerages lowered price targets.
Analysts are saying selling the iPhone 5S is becoming more difficult as the market becomes more "saturated," Reuters reported. The 51 million iPhones sold in the quarter ending Dec. 28 missed the 55 million mark which was expected by Wall Street.
"We don't think Apple has created a meaningful new product category with the iPhone 5C," BMO Capital Markets analyst Keith Bachman wrote in a report, according to Reuters.
Bachman added the problem may lay in the iPhone 5C's pricing and urged Apple produce a "more impactful medium-price iPhone", with a lower price than $549, Reuters reported.
Currently, the Samsung Galaxy S4 sells for $530 and the Google Nexus 5 sells for $350, allowing many more options to buyers on a budget, according to Reuters. Overall, analysts believe Apple will not win back market share unless it creates a cheaper rival.
"Apple has the ability to lower the price of the iPhone to compete more aggressively in the midrange, and we believe the resulting elasticity would yield net profit improvements," Goldman Sachs analysts said, according to Reuters.
Samsung increased its lead over Apple by almost 30 percent of the global smartphone market in the fourth quarter of 2013 due to their options of smart phones for every price brackets, Reuters reported.
Analysts from Credit Suisse said if Apple continues to ignore the "mid-tier" smartphone segment, it will continue to "cede share to Android," according to Reuters.
